State Budget Finalized

There will be no government shutdown in Michigan this year. State lawmakers wrapped up the final key pieces of the next state budget on Wednesday, without tax increases and with spending cuts in many programs other than aid to public schools. In addition, the new plan includes Sunday morning liquor sales.

The Legislature beat its budget-balancing deadline that coincides with the start of the new fiscal year Friday. Lawmakers had missed the deadline in two of the past three years, but the job was made easier this time because of extra cash from the federal government.

WWJ Lansing Bureau Chief Tim Skubick reports some of the final bills passed Wednesday by the Republican-led Senate and the Democratic-run House included proposals to allow Sunday morning liquor sales in Michigan, provide money for road projects and some funding for a second bridge between Detroit and Windsor, Canada. The bills will be reviewed by Democratic Gov. Jennifer Granholm, spokeswoman Liz Boyd said late Wednesday.

Lawmakers are erasing a projected $484 million deficit in the next budget. The deficit would have been far larger if it weren’t for extra federal help.

The latest boosts came with the announcement in August that Michigan would get an additional $380 million for Medicaid and about $316 million for schools. Overall, more than $1 billion in one-time, extra federal assistance will be in next year’s budget.

“It’s the best we could do in a tough situation,” Democratic House Speaker Andy Dillon said of the budget, hindered in large part because of dwindling revenues due to Michigan’s poor economy. “Thank God for the support from the federal government, because it would have been very difficult.”

Dillon and Republican leaders said next year’s budget will be tougher because the federal aid is expected to expire.

Dillon had wanted bigger, longer-term changes including a consolidated health care plan for public employees in the state. The proposal has bogged down in the Legislature, but Dillon may continue to push for its passage.

Senate Republican Majority Leader Mike Bishop wanted more cost-saving reforms in the budget, but a consensus on many of his plans could not be reached.

“I think, under the circumstances, this budget did take a step in the right direction,” Bishop said.

The Legislature voted Wednesday to restore $154 per student to every district in the state in the fiscal year that starts Friday. That essentially would return schools to at least the annual minimum of $7,316 per student that districts were supposed to get before budget cuts in the 2009-10 fiscal year. Districts would get $23 to $46 per student on top of that, depending on how much they now receive in state aid.

Most community colleges will be safe from operating budget cuts, but universities face a 2.8 percent reduction.

Legislators also are using one-time accounting changes, including a tax amnesty plan expected to raise roughly $60 million, to make cuts in other areas less severe.

The most significant long-term change – a retirement incentive package for state employees – could save the state $80 million in its first year, but portions of it might be challenged in court by state employee unions once it becomes law. Unions aren’t happy that employees will be required to pay 3 percent of their salaries into retiree health funds for three years.

The liquor proposal would allow Sunday morning alcohol sales that are now banned under Michigan law. Establishments would have to pay $160 for the special licenses and the money raised would boost the state budget.

“We’ve been working on this for a long time,” said Lance Binoniemi of the Michigan Licensed Beverage Association. “We’ve been hung up for years on what the fees should be.”

The plan also might help establishments that say they have lost business because of the state’s smoking ban that took effect earlier this year.